organised governance or organised chaos
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An investigation of the 7 division organising board as a tool for organising compliance and
conformance out of chaos.
ORGANISING BOARD
ORGANISED GOVERNANCE OR ORGANISED CHAOS
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ORGANISING
BOARDORGANISED GOVERNANCE OR
ORGANISED CHAOS
CONTENTS
Organising Governance ......................................................................................................................... 1
Organising Board ................................................................................................................................... 2
Governance Theory ............................................................................................................................... 2
Governance Modes ............................................................................................................................... 4Governance Models ............................................................................................................................... 4
Chaos to Compliance............................................................................................................................. 5
Appendix 1 ............................................................................................................................................. 6
Nimitz 7 Division Organising Board .................................................................................................... 6
Bibliography ......................................................................................................................................... 15
ORGANISING GOVERNANCE
I will investigate the 7 Division Organising Board in relation to
Governance Theory, Governance Modes and Governance Models
to prove it practical in a non-profit organisation; that it stops our
board from being bored when the agenda turns to governance.
DOING THINGS
RIGHT TO DO
THE RIGHT
THING
Governance is the process
of providing strategic
leadership to a non-profitorganisation. It entails the
functions of setting direction,
making policy and strategy
decisions, overseeing and
monitoring organisational
performance, and ensuring
overall accountability. Non-
profit governance is a
political and organisational
process involving multiple
functions and engaging
multiple stakeholders.
(Renz, n.d.)
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ORGANISING BOARD
The Organising Board is a resource allocation tool that was first used by Admiral Nimitz to organise
and man up the U.S. Navy during World War II. (Morton, 1989). L. Ron Hubbard who had served in
the U.S. navy under Nimitz adapted it to build the Church of Scientology and from there it migrated
into the business world. It has been adapted and adopted by the corporate world. I have used itwhile consulting in organisations such as Sony, Chick Corea/Mad Hatter Studios, Stirling Software,
Fitness Choice, Neaumann Engineering, et al. Full details of it are found in Appendix 1
GOVERNANCE THEORY
Our particular non-profit follows Carvers Policy Governance Theory with some overtones of Christian
Stewardship (Jeavons, 1994), Stakeholder (Freeman, 2010) and Team Production (Blair, March 1999)
theories.
We largely inherited our policies and procedures from our parent organisation located in Americus,
Georgia, U.S.A. We have adapted them for Australian laws and corporate governance guidelines as set
out by the Australian Charities and Not-For-Profits Commission. (Australian Tax Office, 2013). The
parent organisation set out the Operational Policy and Procedures Manual using Carvers Policy
Governance model. Carvers Policy Governance is a radical and effective change in the way boards
conceive of and do their job. It allows greater accountability. Board leadership isn't just rhetoric. It's a
reality. Policy Governance, an integrated board leadership paradigm created by Dr. John Carver, is a
groundbreaking model of governance designed to empower boards of directors to fulfill their obligation
of accountability for the organisations they govern. (Carver, 1996). It is basically applicable to the
governing board of any organisation across all sectors. The model enables the board to focus on thelarger issues, to delegate with clarity, to control management's job without meddling, to rigorously
evaluate the accomplishment of the organisation and to truly lead.
In contrast to the approaches typically used by boards, Policy Governance separates issues of
organisational purpose (the ends) from other organisational issues (the means). Policy Governance
boards demand accomplishment of purpose, and only limit the staff's available means to those which
do not violate the board's pre-stated standards of prudence and ethics.
The board's means are defined in accordance with the roles of the board, its constituents, the
president/chairperson, management officers, and any committees the board may set up to help it
accomplish its purpose. Thus the board "speaks with one voice". Dissent is expressed during thediscussion preceding a vote. Once taken, the board's decisions may subsequently be changed, but will
not be undermined. The board's expectations set out rules regarding the delegation of authority to the
staff or volunteers and the method by which criteria will be used for evaluation. There is then no
confusion about who is responsible to the board or for which board expectations they are responsible.
This focused approach reduces the level of paperwork that boards often feel obliged to review. Boards
sometimes are concerned that they are only given the data that management wants to give them.
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Under Policy Governance they find that, in laying out their expectations and demanding a relevant and
credible accounting of performance, they have effectively taken over control of their major information
needs. It could be argued that Policy Governance grew out of Agency Theory because principal - agent
analysis generally assumes that the problem of interest is getting the agent to do what the principal
wants. Studies of this problem usually do not address the opposite possibility that the agent might
have trouble getting the principal to perform their end of the deal. Nor do they address situations inwhich part of the agent's job is to figure out what needs to be done. Policy Governance overcomes the
shortfalls of Agent Theory by setting out the ends and the meanswhat is expected and how it will be
evaluated.
Christian Stewardship Theory (Jeavons, 1994) explores the question What makes an organisation,
what it does and the way it does it, Christian? Effective Christian organisations acknowledge a
dependence on God for the work they do relying on the wider Christian world for people and funding
resources, making them accountable. Most effective Christian organisations have been and remain
program-driven, not funding-driven (Jeavons 1994, p143). High levels of integrity guide how funding is
sought and used. Our particular organisation for example will not accept funds from sources which itperceives as not supportive of Christian living principles. Scholars have long recognised stewardship as
a key component to relationship management for nonprofit organisations. Jeavons (1994) described the
concept of stewardship as having ancient (even biblical) roots, and noted that nonprofit organisations,
in particular, have an obligation to be good stewards of their resources because they are entrusted with
those resources to benefit the public good.
The stakeholder concept was originally defined as "those groups without whose support the
organisation would cease to exist." The list of stakeholders originally included shareowners,
employees, customers, suppliers, lenders and society. (Freeman, 2010) In the nonprofit sector the list
of stakeholders is extended to include donors, volunteers, clients and the community served.
Using Team Production Theory, Blair puts forward the notion that public corporation law can offer a
solution to team production problems because it allows rational individuals who hope to profit from team
production to overcome shirking and profit-seeking by opting into an internal governance structure that
she calls the "mediating hierarchy." In essence, the mediating hierarchy solution has team members
give up important rights (including property rights over the team's joint output and over team inputs
such as financial capital and project-specific human capital) to a legal entity created by the act of
incorporation. In other words, corporate assets belong not to team members but to the corporation
itself: Within the corporation, control over those assets is exercised by an internal hierarchy whose job
is to coordinate the activities of the team members, allocate the resulting production, and mediate
disputes among team members over that allocation. At the peak of this hierarchy sits a board ofdirectors whose authority over the use of corporate assets is virtually absolute and whose
independence from individual team members is protected by law. Corporate law views directors as
more than mere "agents." Rather, they are a unique form of fiduciary who more closely resemble
trustees and whose duties carry a moral weight. Trustees are expected to serve their beneficiaries'
interests unswervingly and to settle conflicts between beneficiaries with competing interests fairly and
impartially. Although this idea of faithful service appears to clash with an economic analysis premised
on calculations of rational self-interest, trust is one of the most fundamental concepts in law, and it lies
at the heart of a wide variety of legal relationships
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GOVERNANCE MODES
Chait, et. al. (Chait, 2005), introduces three modes of governance. Type I is the "fiduciary mode." The
boards central purpose is the stewardship of tangible assets, and its principal role is to act as a
sentinel. This constitutes the bedrock of governance - fiduciary work is intended to ensure that nonprofit
organisations stay faithful to mission, are accountable for their performance, and are compliant with
relevant laws and regulations. Type II is the "strategic mode." Here, the boards central purpose is toensure a winning strategy for the organisation, and its principal role is to be a strategic partner to senior
management. Without a strategic mode, governance would have little power or influence. It would be
more about staying on course rather than setting the course. Type III is the "generative mode."
Generative thinking is a cognitive process for deciding what to pay attention to, what it means, and
what to do about it. This is where the Board, along with executives and key stakeholders, frame
problems and make sense of ambiguous situations - which in turn shapes the organisation's strategies,
plans, and decisions.
GOVERNANCE MODELS
Nathan Garber (Garber, 1997) sets out five different models of governance. Each approach reflects the
relationship of the board to staff. These are the Advisory Board Model, the Patron Model, the Co-
operative model, the Management Team Model, and the Policy Board Model. Each approach looks at
different dimensions of the roles and responsibilities of the board. The Advisory Board Model relies on
the supportive role of the Board and frequently occurs where the CEO is the founder of the
organisation. The Board's role is primarily that of helper/advisor to the CEO. Board members are
recruited for three main reasons: they are trusted as advisors by the CEO; they have a professional skill
that the organisation needs but does not want to pay for; they are likely to be helpful in establishing the
credibility of the organization for fundraising and public relations purposes. The Patron Model serves
primarily as a figurehead for fund raising purposes. Such boards meet infrequently as their real work is
done outside board meetings. Writing cheques and getting their friends to write cheques is their
contribution to the organisation. The Co-operative Model comes about where organisations try to avoid
hierarchical structures. The decision-making structure in such organisations is typically labelled "peer
management" or "collective management". In this model, all responsibility is shared and there is no
Chief Executive Officer. Decision-making is normally by consensus and no individual has power over
another. If the law did not require it, they would not have a board of directors at all. In order to be
incorporated, however, there must be a board of directors and officers. The organisation therefore
strives to fit the board of directors into its organisational philosophy by creating a single
managing/governing body composed of official board members, staff members, volunteers, and
sometimes clients. I have yet to see a cooperative model that has survived past its founding members
involvement. The Management Team Model gels with modern ideas about team management and
democratic structures in the workplace. It also fits well with the widely held view of non-profits as
volunteer-driven or at least nonprofessional organisations. This model fits well with the experience of
many people as volunteers in community groups like Rotary and Lions Clubs, Parent & Teacher
Associations, Scouts and Guides, and hobby groups such as Mens Sheds. The most important
shortcoming with this model is that it all too frequently degenerates into what I call the Knitting Club
Model in which board members dontdelegate authority, believing that their role requires them to make
all operational decisions, leaving only the implementation to paid or contracted volunteers. The result is
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invariably a lack of consistency in decisions, dissatisfied board members, resentful staff and volunteers
and a dangerous lack of attention to planning and accountability matters. The Policy Board or Policy
Governance Model promotes the view that the job of the board is to establish the guiding principles and
policies for the organisation; to delegate responsibility and authority to those who are responsible for
enacting the principles and policies; to monitor compliance with those guiding principles and policies; to
ensure that staff, and board alike are held accountable for their performance. Boards operating under
the Policy Board Model are characterised by a high level of trust and confidence in the Chief Operating
Officer/ General Manager. There are relatively few standing committees, resulting in more meetings of
the full board. Board development is given a high priority in order to ensure that new members are able
to function effectively, and recruitment is an ongoing process. Members are recruited for their
demonstrated commitment to the values and mission of the organisation.
Our organisation has chosen Carvers Policy Governance Model(Policy Board) as best fitting the way
we desire to operate and our organising board sets out the hierarchy of how the policies and
procedures are inter-related
CHAOS TO COMPLIANCEThe relationship between the board and management is best expressed by Drucker (Drucker, 1989 ):
Boards of non-profit organisations malfunction as often as they function effectively. As the best-
managed non-profit organisations demonstrate, both the board and the executive are essential to the
proper functioning of a non-profit organisation. These administrative organs must work as equal
members of a team rather than one subordinate to the other. Moreover, the work of the executive and
the board does not divide neatly into policy-making versus execution of policy. Boards and executives
must be involved in both functions and must coordinate their work accordingly. In a well-functioning
non-profit organisation, the executive will take responsibility for assuring that the governance function is
properly organised and maintained.
There are a number of reasons we considered a change in our governance model:
board members were dissatisfied with their roles and the way the board operated;
the organisation was experiencing problems that could be traced back to inadequacies in board
structure and/or process;
the organisation or rather a splinter group was entering a new phase in its life-cycle;
there had been a major turnover of board members;
there was a crisis of confidence in the national board.
We decided that although we wanted to stay with the mission and vision of the organisation we were
with at the time, we needed to rethink the whole board structure and governance process. We were
able to segue to a sister organisation that had been formed by the former founders. They had realised
that their former organisation had become too corporatised and politicised. They, like us, wanted a
more grassroots model and had chosen Carvers Policy Governance Model as being the most
appropriate. We have found that it expresses itself very well as both a governance and a management
model if tied to the Organising Board which I have been using for many years in the corporate sector as
a Management and Marketing Consultant.
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APPENDIX 1
Nimitz 7 Division Organising Board
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BIBLIOGRAPHY
Anheier, H. K., 2000. Managing non-profit organisations Towards a new approach. London: Centre for
Civil Society.
Anon., 2010. Governance - Frequently Asked Questions. [Online]
Available at:
http://www.governance.ualberta.ca/~/media/Governance/Documents/GO11/GEN/Governance-
Frequently-Asked-Questions.pdf
[Accessed 27th March 2014].
Australian Tax Office, 2013. Governance for good - the ACNC's guide for charity board members.
[Online]
Available at: https://www.acnc.gov.au/ACNC/Edu/Tools/GFG/GFG_Intro.aspx
[Accessed 22 March 2014].
Blair, M. M. a. S. L. A., March 1999. A Team Production Theory of Corporate Law. Virginia Law
Review, Vol. 85(No. 2), pp. pp. 248-328.
Carver, J. a. M. C., 1996. Basic Principles of Policy Governance. The CarverGuide Series on Effective
Board Governance, No. 1.. San Francisco: Jossey-Bass.
Chait, R. P. Ryan, William P. and Taylor, Barbara E., 2005. Governance as Leadership: Reframing the
Work of Nonprofit Boards. New York: John Wiley and Sons.
Drucker, P., 1989 . Drucker, P. F. "What Business Can Leam from Nonprofits". Harvard Business
Review, Issue Sept.-Oct. , pp. pp. 88-93.
Freeman, R. E., 2010. Strategic Management: A Stakeholder Approach. 25th Anniversary ed. London:
Cambridge University Press .
Garber, N., 1997. Governance Models: What's Right For Your Board. [Online]
Available at: http://garberconsulting.com/governance models what's right.htm
[Accessed 27 March 2014].
Hough, A. a. M.-L. M. a. R. C. M., 2005. Theorising about board governance of nonprofit
organisations:surveying the landscape. In: 34th Annual Conference of the Association for Research on
Nonprofit Organisations and Voluntary Action, 17-19 November 2005. Washington DC: Unpublished.
Morton, L., 1989. War in the Pacific: Strategy and Command: The First Two Years. s.l.:Government
Printing Office.
Renz, D. O. P., n.d.An Overview of Nonprofit Governance. [Online]
Available at: http://www.energycollection.us/Board-Of-Directors/Governance/Overview-Nonprofit-
governance.pdf
[Accessed 27 March 2014].
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